The cryptocurrency sector has reached a crossroads after the fall of the TerraUSD; as a result, market participants have opted to proceed with extreme caution despite the continued existence of uncertainty.
As per the data provided by CoinMarketCap, the total valuation of the crypto market was over $2.2 trillion on the 1st of January. However, as of the 20th of May, it had dropped to $1.29 trillion, representing a decrease of 41.36% since 2022.
Cryptocurrency Fear and Greed Index
The CFGI has reached its lowest level since its inception in 2020. This popular technical indicator evaluates many measures, including market dominance, volume, volatility, surveys, and social media, to ascertain the emotions and attitudes that market players hold.
The total of each value is summed together, and the resulting number is assigned a value from 0 to 100, with 0 representing “severe fear” and 100 representing “extreme greed.” The CFGI rating just reached 8, similar to the crypto market attitude seen close to when the COVID-19 catastrophe occurred in March 2020.
It would seem that the worry that is now present in the cryptocurrency market is the result of unclear regulatory techniques, steadily climbing interest rates in the U.S., and inflation that is spreading across nations.
Although Bitcoin is presently trading at a price over 50% lower than its peak, the market’s mood seems to have been influenced by the downward trend. In the meantime, the spectacular collapse of Terra’s ecosystem is another element that has led to the widespread negative feeling.
Bitcoin Recovers to $30,000
However, the price of Bitcoin, the most well-known cryptocurrency, has climbed back to $30,000 after falling to a price level not seen in 18 months recently.
As a result of the fall, industry analysts have started raising alarm that another “crypto winter” similar to the one that took place in 2018 might be on the horizon.
El Salvador’s President Nayib Bukele is now hosting delegates from 44 different countries to discuss the adoption of Bitcoin at a time when the price of Bitcoin is very unpredictable.
Finally, Harry Dent, the owner of HS Dent Publishing, talked about his market overview for Bitcoin. He issued a red flag that BTC could drop to a price of $3,000 before climbing to $500,000. If the iconic virtual currency falls to that price, the broader cryptocurrency market would most likely face further crypto outflows.